Here’s one reason the housing recovery hasn’t been quite as robust as it could have been: roommates.
Millennials living in their parents’ basement is a somewhat tired trope, but the idea of doubling up — moving in with a roommate (or a family member) because incomes are stagnant and rents are rising — is a real phenomenon.
A new report out from Zillow shows that the number of adults in doubled up households increased to almost a third of all households, from 25.4% back in 2000. That’s a loss of 5.4 million potential household formations.
A lot of these missing household formations are in places where rents are rising faster than income (Florida, California, New York, etc.). According to the report, the silver lining is that there could be a lot of pent up demand for new housing once these doubled up households are read to strike out on their own. But there’s no indication of exactly when this might happen. Wage growth, although finally showing some signs of life, still isn’t accelerating faster than average rents.
And then, there’s this: “On average, doubled-up adults make 76 per cent of the median income of people without roommates, which means it can take longer to save up for a down payment or deposit on a place of their own,” according to Zillow.
Here’s the breakdown by metropolitan area: